british history chapter 9

• Great Depression


  1873 to 1896
• Not single downturn, was cyclical
• Began to face competition and fall in demand
• Salisbury's gov set up Royal Commission into the Depression of Industry and Trade


  1886
• Concluded agricultural prices had been falling since 1873
• Increase in production of most other commodities, supply outstripped demand
• When profit levels were low, there was less money available for capital investment
• Unemployment peaked at 10%


  1886
• For most of period unemployment remained closer to 5%
• Between 1873 and 1896 was a 30-40% drop in price levels of most commodities
• By 1900, Britain imported 50% of foodstuffs and much of raw material, benefited from low import prices
• Wages didn't fall, benefited from lower priced goods and foods
• Rise in standard of living
• Problems in industry


  • Traditional industries expanding but slower
  • Exports of coal, machinery and shipping more predominant
  • These exports comprised tools for process of industrialisation
  • Industrialists too slow to respond to foreign competition
  • By 1880s Britain fallen behind latest technology
• Steel innovations such as Bessemer process and Gilchrist Thomas technique british
• US and Germany had greater natural resources
• Competition felt in steel, coal and iron
• Britain used capital to invest money abroad, profits quick and easy
• Demand for steel at home fell off, railway boom slowed
• Most companies were family owned
• Problems in agriculture


  • 1886 already suffered from cheap imports of wheat from USA
  • Development of canning process in 1880s meant beef could be put in tins and exported to Britain
  • Methods of refrigeration could compete with British goods in term of price
  • By 1899, 40% meat consumed in Britain came from abroad
  • Hardest hit were wheat and cereal counties of south and east, farmers bankrupt, moved to towns
  • Agricultural workers fell from 1m in 1871 to 60k in 1901
  • Many moved into dairy farming as milk could not be easily imported, could be quickly transported some distance within Britain by rail
  • Mixed farming, poultry farming and market gardening
• Staples and new industries, and foreign competition

  • Industrial output in staples continued to rise, growth slowed, textiles for Lancashire, trade and transport to shipbuilding of Tyneside, Clydeside and Belfast
  • Technical innovation opened electrical engineering, motor industry, bicycles, aluminium, rubber and artificial silk
  • New smaller industries such as boot and shoe manufacture, choc, soap, tobacco, beer
  • For businesses to grow, capital required, offered limited liability shares in companies, rise in number of large joint-stock companies, loyalty to shareholders rather than workforce, form giant corporations
  • Change in market for consumer goods, growing population, urbanisation and increase in value of real wages
• Foreign competition


  • 1886 Royal commission noted Britain's manufacturing supremacy was being challenged by foreigners
  • Britain facing stiff competition from other industrialising nations
  • Political stability: germany one nation 1871, USA recovered from civil war
  • Population expansion: large labour force, ready home market
  • Natural resources: coal and iron ore, steel manufacture, by 1900 USA had overtaken Britain in coal output
  • Railways
  • Improved education in Germany
• British shipping industry still largest in world, British merchant fleet represented about ⅓ of total
• Britain bought 50% worlds meat exports
• Invisible exports


  • Britain's balance of payment remained in surplus in spite of negative balance of trade produced by a fall in visible exports and increase in visible imports
  • Dominance in world shipping, contributed to City of London's position as world's main centre of international banking
  • Capital investments abroad e.g. railways across USA, healthy income in interest payments, offset the deficit
  • Britain was the largest exporter of capital and invisible trade
• Debates over protectionism, tariff reform and free trade

  • Britain's free trade policy worked well as long as there was no foreign competition
  • Germany trade tariffs in 1879 and USA in 1890
  • In 1870 british goods had made up almost ⅓ world's manufacturing output, competition, share of market fell
  • Fair Trade League formed 1881, oppressive tariffs
  • Chamberlain felt imperial tariff, british empire
  • 1902 budget introduced duty of 1 shilling on imported wheat to cover boer war
  • Chamberlain wanted to lift it on wheat from the colonies
  • Split Conservative gov under Balfour
  • Chamberlain resigned in 1903 and set up Tariff Reform League